China Struggles to Shake Off Disinflationary Pressure as Trade Threats Loom

China's Outbound Shipments Expanded Only 2.3% Year-on-Year in Jan-Feb Period, Well Below Market Expectations

- WSJ

China's consumer prices dropped in February, in a sign of stubborn disinflationary pressure, ending a year of tepid price growth and underscoring the challenges policymakers face in stimulating domestic demand as trade tensions intensify.

The consumer-price index declined 0.7% from a year earlier in February, flipping from the 0.5% increase seen in the prior month, the National Bureau of Statistics said Sunday. A Wall Street Journal poll of economists had predicted a 0.5% drop.

Economists said the price decline was in part due to a high base from the same period a year earlier, when the weeklong Lunar New Year holiday fell entirely in February versus in late January this year.

Still, economists cautioned that Sunday's downbeat reading indicated that even after a recent stimulus pivot, policymakers have much to do to persuade cautious Chinese households to open their wallets, a daunting task that they said is essential to keeping the tariff-hit economy humming.

In a Wednesday report addressed to China's annual legislature session, Chinese Premier Li Qiang announced an ambitious growth goal of around 5% for the world's second-largest economy this year, pledging to step up government borrowing and boost domestic consumption as Beijing gears up for more trade salvos from the U.S.